×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: bitcoin | celsius network | cryptocurrency volatility | inlfation

Bitcoin Slides After Celsius Network Freezes Withdrawals

Bitcoin Slides After Celsius Network Freezes Withdrawals
(Getty Images)

Monday, 13 June 2022 07:55 AM EDT

Bitcoin tumbled on Monday after major U.S. cryptocurrency lending company Celsius Network froze withdrawals and transfers citing "extreme" conditions, in the latest sign of how financial market turbulence is causing distress in the cryptosphere.

The Celsius move triggered a slide across cryptocurrencies, with their value dropping below $1 trillion on Monday for the first time since January last year, dragged down by 11% fall in the largest token bitcoin.

After Celsius's announcement, Bitcoin touched an 18-month low of $23,476. No.2 token ether dropped as much as 16% to $1,177, its lowest since January 2021.

Crypto markets have dived in the past few weeks as rising interest rates and surging inflation hurt riskier assets across financial markets. The collapse in May of the terraUSD and luna tokens also shook the industry.

"It's still an uncomfortable moment, and there's some contagion risk around crypto more broadly," said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance.

Celsius offers interest-bearing products to customers who deposit cryptocurrencies at its platform, and then lends out cryptocurrencies to earn a return.

In a blog post, the company said it had frozen withdrawals, as well as transfers between accounts, "to stabilize liquidity and operations while we take steps to preserve and protect assets."

"We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations," the New Jersey-based company said.

'GREY AREA'

The surge of interest in crypto lending led to concerns from regulators, especially in the United States, who are worried about investor protections and systemic risks from unregulated lending products.

Celsius and crypto firms that offer services similar to banks are in a "grey area" of regulations, said Matthew Nyman at CMS law firm. "They’re not subject to any clear regulation that requires disclosure" over their assets.

Celsius CEO Alex Mashinsky and Celsius did not immediately respond to Reuters requests for comment outside U.S. business hours.

Celsius raised $750 million in funding late in November from investors, including Canada's second-largest pension fund Caisse de Dépôt et Placement du Québec. Celsius was valued at the time at $3.25 billion.

As of May 17, Celsius had $11.8 billion in assets, its website said, down by more than half from October, and had processed a total of $8.2 billion worth of loans.

Mashinsky, the CEO, was quoted in October last year saying Celsius had more than $25 billion in assets.

The company's website, which urges customers to "Earn high. Borrow low," said it offers interest rates of up to 18.6%.

Rival crypto lender Nexo said on Monday it had offered to buy Celsius' outstanding assets.

"We reached out to Celsius Sunday morning to discuss the acquisition of its collateralised loan portfolio. So far, Celsius has chosen not to engage," said Nexo co-founder Antoni Trenchev.

Celsius did not immediately respond to a request for comment on Nexo's offer.

© 2022 Thomson/Reuters. All rights reserved.


StreetTalk
Bitcoin tumbled on Monday after major U.S. cryptocurrency lending company Celsius Network froze withdrawals and transfers citing "extreme" conditions, in the latest sign of how financial market turbulence is causing distress in the cryptosphere.
bitcoin, celsius network, cryptocurrency volatility, inlfation
480
2022-55-13
Monday, 13 June 2022 07:55 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved